Fed removes restrictions on Wells Fargo after fake-accounts scandal
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The Federal Reserve said it has removed restrictions it had placed on Wells Fargo, the prominent San Francisco bank that has sought to move past a series of scandals in the last decade.
The Federal Reserve said in a statement that the bank is no longer subject to an asset restriction it had placed on Wells Fargo in 2018 due to a toxic sales and banking culture.
“We are a different and far stronger company today because of the work we’ve done,” Wells Fargo Chief Executive Charlie Scharf said in a statement.
Employees say intense sales demands at Wells Fargo branches create a dilemma for many: cheat or risk being fired. Bank officials say they make ethical conduct a priority.
Scharf also announced that each of the 215,000 employees at Wells Fargo would receive a $2,000 award for turning the bank around.
Wells Fargo had been under tighter rules since 2018 because of a corporate culture that set unreasonable sales goals for branch-level employees.
Wells Fargo was the subject of a Times investigation in 2013 that revealed a pressure-cooker culture at the bank in which employees opened unneeded accounts for customers, ordered credit cards without their permission and forged signatures on paperwork.
The fake accounts scandal cost Wells Fargo billions of dollars in fines and and battered its reputation. The bank later ousted much of its leadership and board of directors.
Wells Fargo’s decision to move its headquarters in San Francisco is the latest sign of how the banking industry is becoming less prominent in California.
The Fed placed Wells Fargo under a program known as an asset cap. Under the program, the bank could grow no larger than it was in 2018, a rarity in the banking industry.
Wells was also required to fix its culture and restructure its risk and compliance departments.
Scharf took the helm of the bank in 2019. Since then, he has been working to convince the Fed that Wells Fargo had reformed.
With the removal of the asset cap, the bank now can aim for higher deposits and new accounts as well as pursue additional investment banking businesses by keeping additional securities on its balance sheet.
The Associated Press contributed to this report
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